10 CEOs to Watch in 2010

Crystal-balling is always a dangerous vocation. One year from now, the retail landscape may look significantly different than it does today. Or it might not. Will dollar stores continue to take market share away from mid-priced retailers? Will luxury retail regain momentum? Will consumers stay focused on necessities? The truth is no one really knows. So rather than offer up predictions about the future, Chain Store Age (with an assist from industry experts) has come up with something different: a list of the retail CEOs we think will bear watching as the year unfolds.

Missing from the list are some of the industry’s most high-profile leaders. And that’s by design. There is no Wal-Mart chief, nor J.C. Penney head, nor Kohl’s, Macy’s, Target or Safeway CEOs. And no Mickey Drexler. Instead of those high-flying chief executives—who are bound to be in the headlines year-round by virtue of their company’s weight and/or their own prominence—we have trained our eyes on 10 CEOs who tend to motor a little lower on the media radar.

Maybe it’s because they are newer. Or, in other instances, because their company size is smaller. Whatever the reason, the following chiefs topped our short list of CEOs worth watching because of the influence they wield in their respective categories—and because they are willing to shake things up a bit. And that could be what makes the Chain Store Age CEO list worth watching in 2010.

Richard DreilingCEO, Dollar General Corp. Goodlettsville, Tenn.

Now’s a great time to be a dollar store guy. As the recession took hold, and specialty retailers took a tumble, discounters never missed a step—marching forward and recording rising sales and profits.

Of the discount group, dollar stores have enjoyed some of the greatest highs. And Dollar General may have experienced the biggest high of all, as CEO Rick Dreiling, 54, led the company toward a late-2009 IPO. All this occurred less than two years after he left a turnaround role at Duane Reade to take the reins of Dollar General, where he was charged with helping the chain maximize its potential after a $6.9 billion buyout by Kohlberg Kravis Roberts.

Under Dreiling, Dollar General has grown throughout the recession, recording consistent increases in sales, comps, profits and total number of stores. But the leadership road hasn’t been easy. In his two years as CEO, Dreiling has transitioned the ownership of the company, overseen the addition of new private-label items, streamlined the inventory process, and opened and remodeled hundreds of stores. And he oversaw the much-heralded November debut on the New York Stock Exchange.

Dollar General appears to be betting that it will maintain the strong shopper base it cultivated during the downturn, but Dreiling isn’t passive about customer retention. A merchandise overhaul that has focused on private-label brands—the company’s True Living line of home products is set to roll out to all of Dollar General’s units by April 2010—and initiatives to improve store-manager morale are upping shopper experience.

Watch for more of the same from Dreiling in 2010. While not everyone is convinced that Dollar General can continue its current growth rate next year, plenty believe the discounter’s more trend-relevant position will carry its momentum forward. And Dreiling’s expansion plans are ambitious to say the least: With some 8,700 stores in the United States, Dollar General plans to open 600 new stores in 2010 and remodel or relocate another 500.

Karl-Johan PerssonCEO, Hennes & Mauritz (H&M) Stockholm, Sweden

The new, 34-year-old chief executive of the world’s fast-fashion giant isn’t letting the economic downturn get in the way of the chain’s global push. H&M continues to expand aggressively, both online and in existing markets. The $14.5 billion company will debut a 30,000-sq.-ft. Paris flagship this year as it continues to focus on Europe, North America, Japan and China. Also on tap are two new markets: South Korea and Israel.

Persson, who took the company reins in July 2009 upon the retirement of Rolf Eriksen, grew up immersed in the H&M culture. His grandfather founded the chain in 1947 and his father (still chairman of H&M) served as chief executive from 1982 to 1998.

Committed to the core brand, Persson has made it clear that H&M’s namesake brand is essential to its success. But at the same time, he has shown a knack for forging new ground. He was instrumental in H&M’s move into home furnishings and the launch of its more upscale COS chain. It will be interesting to see how these new ventures play out in the coming months.

Jane ElfersPresident and CEO, The Children’s Place Secaucus, N.J.

With 25 years experience in retailing, most recently as CEO of Lord & Taylor, Jane Elfers has found herself a new challenge: Bring stability back to The Children’s Place and start moving the brand forward again.

The $1.6 billion, 953-store chain has been working on a turnaround since 2007 when founder Ezra Dabah was forced out after an investigation showed he violated internal policies for securities trades. (In July, he lost a proxy fight over a new slate of board members and stepped down from the company). Elfers officially took the reins at Children’s Place in January, replacing Chuck Crovitz who served as interim CEO since Dabah’s outster.

The new chief executive’s track record is impressive. Elfers ran Lord & Taylor for nine years, rejuvenating the brand and bringing a more upscale and contemporary look to the stores and merchandise mix (she left in 2008 after the department store chain was sold to NRDC Equity Partners).

Elfers has set her priorities for Children’s Place: Expand the chain to new markets, particularly value centers, and enhance the brand’s Web site with a broader selection of products and services and improved customer experience. But she has already succeeded in one important area: Most industry experts say her mere appointment brought a much-needed feeling of confidence back to Children’s Place.

Craig HerkertPresident and CEO, SuperValu Inc. Eden Prairie, Minn.

Craig Herkert hardly had time to warm the seat of his new corner office chair when he was faced with explaining less-than-stellar financial results at his first analysts conference call.

Named CEO of mega-grocer SuperValu Inc. in May 2009, then adding president to his title in July, Herkert, 50, decided to get right to the point with company shareholders on the July 29, 2009, call. He declared the first-quarter 2010 sagging sales and profits “unacceptable,” and promised a new approach that focused less on remodels and more on the SuperValu customer.

So far, Herkert has been true to his word. He eliminated the $44 billion company’s established high/low pricing strategy, and instead lowered pricing overall in Chicago and California stores under a now-expanding customer-based initiative called “The Big Relief price-cut program.” Rather than mimic his former employer, Wal-Mart Stores—Herkert was previously president and CEO of the Americas for the discounter—and implement an everyday low pricing strategy, Herkert moderated the cost to customers across the board.

Then he outlined a 10-point program that refocuses SuperValu on its customer, calling for positive shopping experiences, support for independent retailers, a value image, enhanced brand messages, reduced SKUs and centralized merchandising and marketing.

Watch for Herkert in 2010 to keenly analyze 2,421 locations nationwide for implementation of customer-centric policies and philosophies designed to simplify shopping. And watch as he embarks on a strategy to double the now 1,200 locations of the retailer’s value banner Save-A-Lot.

It won’t be an easy road for Herkert in 2010. The company reported a 42% drop in earnings in its most recent quarter as shoppers cut back or went elsewhere. “It’s clear the company is still a long way from any meaningful recovery,” warned Credit Suisse analyst Edward Kelly in a November 2009 investor’s note.

Robert FischPresident and CEO, rue21 Inc. Warrendale, Pa.

Bob Fisch is no newbie to the CEO suite. His tenure at rue21 has spanned almost a decade. The specialty apparel retailer gave Fisch the nod in August 2001, acknowledging that his previous position as president of Casual Corner Group could serve the value fashion retailer well.

Rue21 was right. Under Fisch, the chain exited a voluntary reorganization bankruptcy and grew to more than 500 stores in 43 states. And in November 2009, the then-privately held retailer debuted on the New York Stock Exchange.

Fisch appears to have a knack for retailing to the tween and teen sets. He has led a merchandising charge that puts daily shipments in stores to keep offerings fresh and up-to-the-minute. He orchestrated the private-label rue21 etc! brand, a girls jewelry and accessories category, as well as the rueKicks footwear line and tarea by rue21 intimate apparel category.

And at a time when other specialty apparel retailers are tightening their footprints, rue21 is rolling out a larger layout to accommodate a rue21 etc! store-within-a-store concept.

Watch for Fisch to further develop the company’s “fast-fashion” initiative that is allowing rue21 to rapidly identify fashion trends and get them into stores on a lower-cost, faster-turnaround, lower-inventory model. And in 2010, watch for him to fast-track an expansion mode that calls for 500 more stores over the next five years.

Joseph DePintoPresident and CEO, 7-Eleven Inc. Dallas

Should Joe DePinto decide to give up his 7-Eleven day job, the producers of “Extreme Makeover” just may come calling. The 47-yearold CEO of the world’s largest convenience-store chain has shown a real knack for redos.

In fact, an August 2009 headline in D Magazine, published out of the chain’s home base of Dallas, shouted, “Joe DePinto Remakes Dallas Icon 7-Eleven.”

Remaking a global 36,000-store chain is no easy feat, even if you’re the retail magician that orchestrated GameStop Corp.’s rise to the top of the video-game heap. But DePinto, 7-Eleven’s chief since 2005, has managed to tackle the perception that his c-store chain is convenient but expensive—which, in a downturn, is not an image any retailer wants to have.

DePinto launched the makeover by introducing a lineup of private-label food brands priced 10% to 20% below their national-brand counterparts. And he is embracing the chain’s favorite customer demographic—18-to-24-year-old males. The chain is testing “guy food” such as pizza and chicken tenders warmed onsite. And DePinto is calling on his video game roots by devoting a section of the store to games, as well as testing the popular Redbox movie rental machine.

Logistics makeovers have been logged during DePinto’s term, as well. He has upped the ratio of franchises to company-owned locations from 50/50 to 70/30, and he has combined distribution centers to speed up deliveries.

Watch for DePinto to continue his makeover magic in 2010, adding more private-label items and continuing to streamline distribution. And watch for him to continue to aggressively expand the chain’s store count, both by business conversions, acquisitions and new locations. On tap: 250 stores in 2010.

Brian DunnPresident, CEO, COO, Best Buy Co. Inc. Richfield, Minn.

Brian Dunn is a man of the people, quick to tell investors and press that, even as CEO of a major retail player, he is as comfortable in the royal blue shirt as the next Best Buy associate. His average-guy attitude is understandable. He launched his career as a Best Buy associate in 1985, working his way up the leadership ladder until, at age 49, in June 2009, he was named chief executive.

In his six-month tenure at the helm, Dunn has tampered with the typical CEO image. No social slacker, he is called by some “the country’s most socially networked CEO.” Dunn tweets, he “friends,” and he’s LinkedIn.

Dunn might indeed enjoy staying connected, but those in the know say it’s more about using his influence to challenge the company to fight against bureaucracy and champion an informal internal culture. In fact, he is participating in the very culture that Best Buy embraces—an “open/social strategy” that encourages employees to be honest and transparent in their communications.

Transparency is admirable, but it may not fly as Dunn gets more and more bogged down in the politics, red tape and pure workload that is today’s big business. Some industry watchers have expressed concern that leaders like Dunn, who are social network users, may be putting their company—and its image—at risk.

Unless and until his ordinary-ness and openness catch the negative attention of shareholders, look for Dunn to continue connecting with people. It is what he appears to do best, and it could have a long-lasting impact on the culture of Best Buy Co. As the year unfolds, it will be interesting to see if he gets pressured to walk a more corporate line.

Glenn MurphyCEO, Gap Inc. San Francisco

If the end of 2009 is indicative of Glenn Murphy’s new year, the Gap Inc. chief executive has reason for cautious optimism. Net earnings for the third quarter (ended Oct. 31, 2009) climbed 25% to $307 million. Net sales totaled $3.59 billion compared with $3.56 billion last year. But more than the numbers, it’s that the Gap seems to be walking a little taller these days. Several initiatives—including the revitalization of the company’s Old Navy division—have upped the chain’s confidence and given the company some hope that it is on the right path to regaining lost market share in the United States.

Murphy has flown largely under the radar since he took the reins of the nation’s largest apparel chain in July 2007. The industry wasn’t quite sure what to make of him: He previously served as CEO of Canada’s Shoppers Drug Mart, where he engineered a turnaround that helped create a drug store powerhouse. At Gap, he initially set himself to putting the company’s house back in order. A strong leadership team, lean inventory and cost controls had won him the respect of Wall Street. He also has dramatically expanded Gap’s international and online businesses, which have grown about 20% to nearly one-fifth of Gap’s total sales during the past two years.

With a solid foundation in place and plenty of cash on hand, the company still has plenty of work to do. While Old Navy is outperforming, sales are still down at the namesake brand and Banana Republic. Many experts contend that 2010 will be the year when Gap—and Murphy—shows if the changes put in place these last few years have staying power.

Thomas JohnsonCo-CEO Mindy Meads Co-CEO Aeropostale New York City

The general consensus is that it will be mostly smooth sailing for Mindy Meads and Thomas Johnson in their new roles as co-CEOs of the nation’s fast-growing apparel specialty chain, Aeropostale. The duo took the reins at the beginning of this year when the teen retailer’s longtime chief executive, Julian Geiger, stepped down. (He remains chairman.)

Meads has served as president and chief merchandising office since March 2007. Before Aeropostale, she was president and CEO of Victoria’s Secret Direct, the Victoria’s Secret online and catalog division of Limited Brands Inc. Johnson was named executive VP and COO of Aeropostale in 2004. Previously, he was director of stores for David’s Bridal Inc.

The two executives have played a key role in Aeropostale’s transformation from just another teen mall-retailer to one of the hottest chains around. With its value prices and on-trend fashions, the $1.9 billion company has bucked recession trends (and bested nearly all its competitors) by posting record sales and profit increases during the recession. It also diversified its portfolio, launching a kid’s format, P.S. from Aeropostale. Some 25 Aeropostale stores, about 25 to 30 P.S. from Aeropostale stores, and 40 store remodels are planned for this year.

But while no one is doubting the abilities of either chief, co-CEO strategies in retail are not that common and have a mixed track record in general. Analysts have said a strong team-oriented culture bodes well for power-sharing at Aeropostale and that the two new bosses have already shown they work well together. It will be interesting to watch during the coming year how they pull it off.

John DeMerittCEO, Francesca’s Collections Inc. Houston

Today’s shopping malls have a new darling in John DeMeritt. The three-year veteran chief of apparel and accessories boutique Francesca’s Collections has spent his tenure making a name for the Houston-based chain in enclosed malls across the country, augmenting its trendy lifestyle center openings with a presence in less sexy malls.

That’s John DeMeritt’s doing. While many retailers turn a cold shoulder to interior mall spaces, DeMeritt has embraced them, capitalizing on terrific real estate opportunities. And some seem to think the real estate strategy will pay dividends.

Look for DeMeritt to continue to grow the privately held, 9-year-old Francesca’s in 2010 via a combo open-air and enclosed mall growth tactic that is slated to take the chain from its current 150 stores in 31 states to more than 200 stores.

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